1995 (12) TMI 329 - SC - VAT and Sales Tax

Power conferred by section 29-A of the Madhya Pradesh General Sales Tax Act, 1958 Held that - Appeal allowed. Every person who transports goods of the kind notified by the State Government, and it is not disputed that supari is notified, must carry with him an invoice, bill or challan or any other document issued by the consignor of the goods that gives particulars relating to the goods. The transporter is obliged to stop the vehicle carrying the goods when required to do so to allow the sales tax authority to verify and check the declarations and documents aforestated and to search the vehicle and inspect the goods. If such search and verification shows that the declaration that has been filed in respect of the goods is false or incorrect in respect of, inter alia, the value thereof, the authority may presume until the contrary is proved that an attempt is being made to evade sales tax. He must then record his reasons in this behalf and supply a copy thereof to the transporter. If after considering the transporter s explanation, the authority remains unsatisfied, he is required so to record and to serve on the transporter a notice to show cause why a penalty should not be imposed upon him. In the premises, the High Court was plainly in error when it held that the aforesaid provision does not authorise the authorities to question the value of the goods as contained in the documents with reference to market value. The provision clearly does.

Summary

Issues:
- Interpretation of section 29-A of the Madhya Pradesh General Sales Tax Act, 1958 regarding the power of sales tax authorities to question the value of goods for the purpose of tax evasion.

Analysis:
The judgment delivered by the Supreme Court involved a common question concerning the interpretation of section 29-A of the Madhya Pradesh General Sales Tax Act, 1958. The case revolved around a truck carrying "supari" that was checked by sales tax authorities, revealing discrepancies in the declared value of the goods. The authorities issued a notice under section 29-A(11) to the respondent, alleging evasion of sales tax and imposing a penalty. The respondent challenged the notice through a writ petition in the High Court, which ruled in favor of the respondent, stating that the authorities cannot question the value of goods based on market value.

Section 29-A of the Act empowers the State Government or the Commissioner of Sales Tax to establish check-posts or barriers to prevent tax evasion. It mandates that every person transporting notified goods must carry relevant documents and allow verification at check-posts. If discrepancies are found in the declaration, the authority can presume tax evasion unless proven otherwise. The officer must record reasons for suspicion and serve a notice to show cause for imposing a penalty. The Court emphasized that the provision indeed allows authorities to question the value of goods declared, contrary to the High Court's ruling.

In conclusion, the Supreme Court allowed the civil appeals, setting aside the orders under appeal. The Court clarified that section 29-A empowers authorities to question the value of goods declared for the purpose of preventing tax evasion. The judgment serves as a significant interpretation of the powers conferred by the Act in combating tax evasion and upholding tax compliance.